COUNTERCOLUMN: All Your Bias Are Belong to Us

Sunday, January 06, 2008

UK Living Standards Outstrip US

Silliness. The UK can't hold a candle to US production, and measuring it by per capita GDP which is then denominated by one currency or another is retarded. What that measures is the decline of the dollar against the pound. It also counts inflation as a plus on the ledger sheet.

But inflation was higher in the UK last year than in the US, 3.2% to 2.8% (Then there is all sorts of madness about how inflation is calculated in both countries)

For the paper to be crowing about that is like the rooster taking credit for the sunrise.

Yes, the paper does cop to the currency criticism (but not the inflationary one.)

But what's this it says? "the average American has more spending power than his UK counterpart and pays lower taxes."

Wow. UK living standards outstrip American living standards, even though Americans have more purchasing power. Where on earth do they get headlines like these?

Brits do pretty well as long as they are free to leave the country to spend their money. Which is why Britain's number one export is still their people.

The claim is COMPLETELY false -- GDP-per-capita does NOT equal "living standards", as any student of basic economics would know. The Oxford Economics report does not present GDP per capita adjusted for purchase power parity (PPP), which is absolutely necessary for ANY conclusion about living standards. Things in the UK are ludicrously expensive by US standards, and so an equivalent income in the UK buys much less stuff than it would in the U.S.

The Oxford Econ analyst was quoted elsewhere (the Observer) explaining a bit about PPP and affirming that Americans have "far stronger purchasing power".

The ORIGNAL posting of this Times article made no mention of PPP at all -- now they've gone back and quietly hedged a bit after getting some abusive comments, but their headline is still bogus.

The idiots at Sunday Times made a complete botch of it and refuse to fess up to their misunderstanding.